Wednesday, January 22, 2014

Economic Populism: Good Policy and Good Politics

A Note on the Political Economy of Populism

Most people don't necessarily "get" Keynesian macroeconomic theory. They do understand vast and increasing inequality, and they don't like it. I hope Obama does make inequality the centerpiece of the upcoming State of The Union address. The President needs to make the case.

It has been painfully obvious, to anyone willing to see (a group that unfortunately doesn't include a large part of the press corps) that deficit obsession hasn't really been about deficits — it has been about using deficits as a club with which to smash to welfare state, and hence increase inequality. Even the supposedly nonpartisan players have this remarkable habit of including "reducing marginal tax rates" as a key goal of deficit reduction strategies, which is a dead giveaway to what it's really about. Conversely, talking about the need to help struggling families is also a way to shift the focus away from deficit obsession, and pave the way at least for a relaxation of austerity, if not actual stimulus.

I'm holding out for actual stimulus. Make the case, and then beat the Republicans mercilessly in the midterms with their anti-worker, anti-family, regressive policies.